Key Changes Brought by Labour Reform Codes

Author: Divyansh Drona

Lawyer

OVERVIEW

The President on September 28th, 2020 gave his assent to the three labour reform codes- The Code on Social Security, 2020, The Occupational Safety, Health and Working Conditions Code, 2020 and The Industrial Relations Code, 2020. The Codes will come into force after an official notification is issued by the Central Government and the date for the same hasn’t been notified by the government yet.

 

Existing Labour Codes Subsumed:

  • Industrial Relations Code, 2020 subsumed, 1) The Industrial Disputes Act, 1947; 2) The Trade Unions Act, 1926; and 3) Industrial Employment (Standing Order) Act, 1946.
  • The Code on Social Security, 2020 replaces nine laws on social security including, 1) The Employees’ Compensation Act, 1923; 2) The Employees’ State Insurance Act, 1948; 3) The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; 4) The Employment Exchanges Act, 1959; 5) The Maternity Benefit Act, 1961; 6) The Payment of Gratuity Act, 1972; 7) The Cine Workers Welfare Fund Act, 1981; 8) The Building and Other Construction Workers Welfare Cess Act, 1996; and 9) Unorganised Workers’ Social Security Act, 2008.
  • The Occupational Safety, Health and Working Conditions Code, 2020 replaces thirteen labour laws including, 1) The Factories Act, 1951; 2) The Plantations Labour Act, 1951; 3) The Mines Act, 1952; 4) The Working Journalists and other Newspaper Employees and Miscellaneous Act, 1955; 5) The Working Journalists Act, 1958; 6) The Motor Transport Workers Act, 1961; 7) The Beedi Cigar Workers Act, 1966; 8) The Contract Labour Act, 1970; 9) The Sales Promotion Employees Act, 1976; 10) The Inter-State Migrant workmen Act, 1979; 11) The Cine-Workers and Cinema Theatre Workers Act, 1981; 12) The Dock Workers Act, 1986; and 13) The Building and Other Construction Workers Act, 1996.

THE INDUSTRIAL RELATIONS CODE, 2020

The Industrial Relations Code seeks to amalgamate and combine three major laws governing employee-employer relationship, after making some key amendments to the provisions. Some notable changes brought by the code are:

  • The Code provides for a maximum number of members in the Grievance Redressal Committee up to ten in an industrial establishment employing twenty or more workers There shall be an adequate representation of the women workers therein in the proportion of the women workers to the total workers employed in the Industrial establishment. (Section 4)
  • The code introduces a new provision for recognition of a ‘negotiating union’ or ‘negotiating council’. There shall be a negotiating union or a negotiating council, as the case may be, in an industrial establishment having registered Trade Union for negotiating with the employer of the industrial establishment, on such matters as may be prescribed. Where there is only one trade union in an industrial establishment, on such matters as may be prescribed. When there is only one trade union in an industrial establishment, the employer is required to recognise such trade union as the sole negotiating union of the workers. If there are multiple trade unions, the trade union with support of at least 51% of workers on the muster roll of that establishment will be recognised as the sole negotiating union by the employer. (Section 14)
  • An industrial establishment needs to comply with the requirement of adopting Standing Orders only if it has 300 or more workers. Under the existing law, this threshold is 100. (Section 28)
  • The Code provides for resolution of disputes between the employer and the employee through arbitration on the basis of a written agreement. Such arbitration will be governed by the procedure under the Code. Nothing in the Arbitration and Conciliation Act, 1996, shall apply to arbitrations under the Code. (Section 42)
  • The Code sets up Industrial Tribunal consisting of a Judicial Member and an Administrative Member, in place of only Judicial Member who presently prised the Tribunal. For certain specified cases, the matters will be decided by the two-member Tribunal and the remaining shall be decided by single-member Tribunal as may be provided for in the rules. Industrial Tribunals replace existing multiple adjudicating bodies like the Court of Inquiry, Board of Conciliation and Labour Courts. (Section 44)
  • The Central Government may, by notification, constitute one or more National Industrial Tribunals for the adjudication of industrial disputes which, in the opinion of the Central Government, involve questions of national importance or are of such a nature that industrial establishments situated in more than one State are likely to be interested in, or affected by, such disputes. (Section 46)
  • The Code prohibits strikes in all industrial establishments without prior notice of 14 days to the employer. Previously, the requirement was applicable only to ‘public utility services’ and other notified services. Also, the code increases the validity of the notice of strike to 60 from the existing 6 weeks. (Section 62-63)
  • Previously, establishments with more than 100 workers needed the prior permission of the government to retrench workers. The Code has waived this requirement for establishments with less than 300 workers. (Section 77)
  • Such prior permission is not necessary if the retrenchment is due to shortage of power, natural calamity, and in the case of a mine, such retrenchment is due to fire, flood, excess of inflammable gas or explosion. (Section 78)
  • The Code introduces a worker re-skilling fund. The fund shall consist the contribution of an employer of an industrial establishment an amount equal to fifteen-day wages last drawn by the worker immediately before the retrenchment, or such other number of days as may be notified by the Central Government, for every retrenchment worker in case of retrenchment only. (Section 83)
  • The Code provides for compounding of offences by a Gazetted Officer, as the appropriate Government may, by notification, specify, for a sum of fifty per cent of the maximum fine provide for such offence punishable with fine only and for a sum of seventy-five per cent, for such offence punishable with imprisonment for a term which is not more than one year, or with fine. (Section 89)
  • The appropriate government has the power to exempt any industrial establishment or any class of industrial establishments from the provisions of the Code. (Section 96)

 

THE CODE ON SOCIAL SECURITY, 2020

The Code on Social Security seeks to amend and consolidate the laws relating to social security with the goal to extend social security to all employees and workers in the organised or unorganised or any other sector. Some notable changes brought by the code are:

  • Apart from a migrant worker recruited through a contractor, the definition ofinter-state migrant worker includes a person who has come on his own from one state and obtained employment in an establishment of another state. The definition covers workers drawing wages not exceeding eighteen thousand rupees per month or such higher amount as may be notified by the Central Government from time to time. (Section 2(19))
  • The Code defines gig worker as a person who performs work or participates in a work arrangement and earn from such activities outside of traditional employer-employee relationship. (Section 2(35))
  • The Code defines platform worker as a person who has a work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to access other organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which my be notified by the Central Government, in exchange for payment. (Section 2(60)-2(61))
  • The Code defines unorganised workeras a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Chapter III to VII of the Code. (Section 2(86))
  • The Central Government shall frame suitable schemes for unorganised workers on matter relating to life and disability cover; health and maternity benefits; old age protection; education; and any other benefit as may be determined by the Central Government. (Section 109)
  • The State Government shall frame suitable welfare schemes for unorganised workers, including schemes relating to provident fund; employment injury benefit; housing; educational schemes for children; funeral assistance; and old age homes. (Section 109)
  • Every unorganised worker, gig worker or platform worker shall be required to be registered under the Code provided that the person has completed 16 years of age. Aadhaar number is mandatory for such registration. (Section 113)
  • Aadhaar number is made mandatory for availing benefits and services under the Code. (Section 142)
  • The Code empowers the appropriate government to exempt any industrial establishment or class of industrial establishments from the provisions of the Code. (Section 143)
  • The Code empowers the Central Government to defer application of the provisions of the Code for a period of three months in the event of a national disaster, pandemic or endemic. (Section 144)
  • The Code makes Employees Provident Fund Scheme applicable to all establishments having 20 or more employees. Under the EPF Act, only those establishments listed in the schedule having 20 or more employees were brought under the EPF scheme. (First Schedule)
  • Employees State Insurance is applicable to every establishment in which ten or more persons are employed other than a seasonal factory. (First Schedule)
  • Gratuity is made applicable to every factory, mine, oilfield, plantation, port and railway company; and every shop or establishment in which ten or more employees are employed, or were employed, on any day to the preceding twelve months; and such shops or establishments as may be notified by the appropriate Government from time to time. (First Schedule)

 

THE OCCUPATIONAL SAFETY, HEALTH AND WORKING CONDITIONS CODE, 2020

The Occupational Safety, Health and Working Conditions Code was formulated according to the report and recommendations of the Second National Commission on Labour. The Code consolidates and amends the laws that regulate the occupational safety, health and working conditions of the persons employed in an establishment. Some notable changes brought by the Code are:

  • The Code defines establishment as any place where any hazardous activity is carried out regardless of the numbers of workers. Earlier there was threshold of 10 or more workers. (Section 2(1)(v))
  • The Code defines Factoryas any premises where manufacturing process is carried out and whereon twenty or more workers are working, or were working on any day of the preceding twelve months where manufacturing process is carried out with the aid of power; or whereon forty or more workers are working, or were working on any day of the preceding twelve months where manufacturing is carried out without the aid of power. (Section 2(1)(w))
  • Inter-State migrant workerinclude a person who-
  1. has been recruited by an employer or contractor for working in another state; or
  2. moves on his own to another state and obtains employment there.

 

Only, those persons will be considered as inter-state migrants who are earning a maximum of eighteen thousand rupees per month, or such higher amount the central government may notify. (Section 2(1)(zf))

  • The Code specifies that every employer shall
  1. conduct free annual health check-up for their employees;
  2. ensure disposal of hazardous and toxic waste including disposal of e-waste;
  3. issue a letter of appointment to every employee on his appointment in the establishment. (Section 6)
  • The Code applies to every establishment in which fifty or more contract labour are employed or were employed on any day of the preceding twelve months through contract. (Section 45)
  • The Central Government and the State Governments shall maintain the database for inter-state migrant workers, electronically or on a portal. An inter-state migrant worker can register himself on the portal on the basis of self-declaration and Aadhaar. (Section 21)
  • The Code specifies that the appropriate government may, by general or special order, require any establishment or class of establishments to constitute in the prescribed manner a Safety Committee consisting of representatives of employers and workers engaged in such establishment. (Section 22)
  • The Code specifies an appointment of welfare officer in every factory, mine or plantation wherein two hundred and fifty or more workers are ordinarily employed. (Section 24)
  • The Code sets the daily work hour limit to eight hours per day. (Section 25)
  • The Code provides that women will be entitled to be employed in all establishments for all types of work (earlier they were excluded from being employed in dangerous operations). However, the employer may be required to provide adequate safeguards prior to their employment. (Section 43-44)
  • According to the Code where an offence under the Code has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. (Section 109)
  • There shall be established by the appropriate Government a social security fund for the welfare of the unorganised workers. (Section 115)
  • The Code specifies that in case of a public emergency or disaster or pandemic in whole of India or part thereof, the appropriate government may, by notification, exempt any workplace or work activity or class thereof from all or any of the provisions of the Code. (Section 128)

 

The Code on Social Security, 2020

The Industrial Relations Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020

5 thoughts on “Key Changes Brought by Labour Reform Codes”

  1. Elaborate research put into simple and brief words. The article enables a lay man to understand the concepts and theories quite easily! Great work.

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